Late last week, Nokia dropped what many consider to be a bomb on the WebM project: a list of patents that VP8 supposedly infringes in the form of an IETF IPR declaration. The list has made the rounds around the web, often reported as proof that VP8 infringes upon Nokia's patents. All this stuff rang a bell. Haven't we been here before? Yup, we have, with another open source codec called Opus. Qualcomm and Huawei made the same claims as Nokia did, but they turned out to be complete bogus. As it turns out, this is standard practice in the dirty business of the patent licensing industry.

VP8 is at least free. For most people youtube quality is enough and are not expecting Full HD. The quality difference is not that abyssal as you say.

Kochise

Agreed. As you say, not only is it not that much of a quality difference (at quality levels as used on the web), but also one can match that quality per bit using VP8 by choosing a higher profile for VP8. There will be a penalty to pay in terms of encoding time, but as long as one is prepared to pay that encoding-time penalty, then with VP8 one can still achieve the same performance as h.264 in all other parameters (for the video quality levels that are commonly used over the web).